AI Search Engine Perplexity's Valuation Triples to $9 Billion
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Perplexity, an AI-powered search engine, has completed its fourth funding round of the year, tripling its valuation to $9 billion, reports the Financial Times. The $500 million round, led by Institutional Venture Partners (IVP), underscores the fierce competition in the rapidly evolving AI search market.
The San Francisco-based company has experienced significant growth in 2023, with its product receiving hundreds of millions of queries per month. It boasts 15 million monthly active users, with the majority based in the US.
The fresh funding will support Perplexity's efforts to challenge established players like Google and OpenAI in a talent-driven market. "The talent war for AI is like no other time before," notes Ali Ghodsi, co-founder and CEO of Databricks, reflecting the intense competition for skilled engineers.
Perplexity aims to innovate on Google's search advertising model, engaging in discussions with major brands to pilot advertising on its platform. This strategy reflects a broader industry trend toward integrating chatbots with internet searches, with OpenAI's ChatGPT and Anthropic's Claude recently introducing similar features.
Google and Microsoft, dominant players in the $300 billion digital advertising sector, have also incorporated large language models into their search offerings, emphasizing a conversational approach.
Perplexity's valuation has increased ninefold since the beginning of the year, highlighting the significant investor interest in promising AI startups. Following OpenAI's record-breaking $6.6 billion fundraising round, Perplexity reportedly received numerous unsolicited inquiries from potential investors.
Perplexity, led by former Google intern Aravind Srinivas, has already secured $250 million in funding this past summer, in addition to previous rounds in January and April. The company generates revenue through subscriptions, with annualized revenue increasing from $5 million in January to $35 million in August.
While some investors express concerns about potentially inflated valuations in the AI sector, many remain optimistic about companies like Perplexity, recognizing their potential to disrupt the market.